Adler Mallach Holdings Pty Limited v Robertson

[2002] NSWSC 1176

CITATION:	Adler Mallach Holdings Pty Limited v Robertson and anor [2002] NSWSC 1176 revised - 17/12/2002
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 50004/01
HEARING DATE(S):	25 March, 17 April, 1,2,3 July, 25, 26 July 2002
JUDGMENT DATE:	9 December 2002
PARTIES :	Adler Mallach Holdings Pty Limited (Plaintiff) Robert Samuel Robertson (First Defendant) Noaleen Anne Dennis (Second Defendant)
JUDGMENT OF:	Master McLaughlin

COUNSEL :	S. Jacobs (Plaintiff) Defendants in person
SOLICITORS:	Steingold Abel, Solicitors (Plaintiff)
CATCHWORDS:	Damages - Inquiry by Master as to assessment - Necessity for an order for such an inquiry - Heads of damages - Loss of profits - Concept of unfair "springboard" or "headstart" in respect to profits.
CASES CITED:	Industrial Rollformers v Ingersoll-Rand (Australia) Limited [2001] NSWCA 111 sub nomine, Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 Tate & Lyle Food and Distribution Limited v Greater London Council [1982] 1 WLR 149 Tate & Lyle Food and Distribution Limited v Greater London Council [1982] 1 WLR 971 Tate & Lyle Food and Distribution Limited v Greater London Council [1983] 2 AC 511 United States Surgical Corporation v Hospital Products International Pty Limited [1983] 2 NSWLR 157
DECISION:	See paragraph 55.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

MASTER McLAUGHLIN

Monday, 9 December 2002

50004/01 ADLER MALLACH HOLDINGS PTY LIMITED -v- ROBERT SAMUEL ROBERTSON and NOALEEN ANNE DENNIS

JUDGMENT

1 MASTER: The substantive proceedings were heard in the Commercial List by Acting Justice Brownie in July and August 2001.

2 In those proceedings the Plaintiff sought redress in respect to the solicitation of custom from the existing customers of a business conducted by the Plaintiff. The most significant part of that business consisted of the selling of consumables for franking machines.

3 That business had been sold by the First Defendant to the Plaintiff, the sale having been effected by deed dated 4 December 1996.

4 It was alleged by the Plaintiff that the First Defendant, using a false name, established a business in direct competition with the business sold by him to the Plaintiff, and that he solicited custom from the existing customers of that business. It was alleged against the Second Defendant that she effectively assisted the First Defendant in doing this, including later establishing in her own name a business called Digital Franking.

5 The hearing before Acting Justice Brownie occupied seven days in July and August 2001. His Honour delivered his reserved judgment on 20 August 2001 ([2001] NSWSC 691). In the course of that judgment His Honour said (at paragraph 58),

I satisfied that the Plaintiff has made out its case, in respect of every cause of action pleaded, as against both defendants. I am satisfied that the plaintiff has proved at least some loss. The repeated statements of first defendant that the plaintiff’s gross turnover exceeded expectations is no doubt a matter to be weighed, along with the other evidence, but it simply does not prove that the plaintiff suffered no net loss. In my view, the proposition that the plaintiff has suffered some loss is well established.

The plaintiff should now elect what remedies it wishes to pursue: damages, or an account of profits. The defendants should pay the plaintiff’s costs to date.

6 Although how it has been enabled to do so has never been satisfactorily explained, the Plaintiff, despite not having chosen to elect, in any formal sense, what remedies it wished to pursue, nevertheless proceeded upon an assessment of damages, seeking damages against both Defendants for the period 1997-1998.

7 On 12 December 2001 the matter was listed on call-over before Master Macready. The Court file bears the notation that on that date the matter was specially fixed before myself on 25 March 2002. The file does not indicate what aspect of the matter was fixed to be heard by me on 25 March. However, on 1 March 2002 Justice McClellan stood over the matter for assessment of damages before myself on 25 March 2002. The Court file indicates that there was no appearance for the Defendants on that occasion, when only the Plaintiff was represented. Presumably it was upon the estimation given on behalf of the Plaintiff to His Honour that only the one day was reserved for the hearing.

8 It will be appreciated that at the time when Justice McClellan on 1 March specially fixed the hearing of the assessment of damages for 25 March 2002, not only had the Plaintiff not performed the election contemplated by Acting Justice Brownie in his reasons for judgment of 20 August 2001, but no order had been made by Acting Justice Brownie, let alone had been entered. Neither had there been presented to the Court, in any formal fashion, the bases upon which the inquiry as to damages was to proceed.

9 The omission of any order was indeed curious, especially in light of the fact that since His Honour’s judgment was published on 20 August 2001 the matter had come before the Court on no fewer than thirteen occasions (before Justice Hunter, Acting Justice Brownie, Justice Bergin, Master Macready, Justice Palmer, Justice Windeyer, Justice Campbell and Justice McClellan), when various applications (for example, for Mareva orders and for directions) were entertained.

10 It must have been abundantly obvious to the legal representatives of the Plaintiff, in the light of the attitude adopted by the Defendants, who had appeared in person throughout the hearing before Acting Justice Brownie, and in the light of the length of that hearing, that an inquiry as to damages, especially if the Defendants participated in that inquiry, and especially if they were unrepresented in such participation, could not possibly have concluded in a single day.

11 Further, it should have been abundantly obvious, in the light of the judgment of Acting Justice Brownie, that it was absolutely essential that an order be made and entered, so that firstly, the Court would know the precise nature of the exercise which the Master was being required to perform in the matter, and, secondly (and at least equally importantly) that the Master performing the inquiry would be aware of the bases upon which the Plaintiffs were found to be entitled to damages.

12 It should be here recorded that at no stage between 1 March 2002 (when Justice McClellan stood over the hearing of the assessment of damages before myself) and 25 March 2002 when the inquiry as to damages came on for hearing before myself, did the Plaintiff choose to have the matter listed before me either for mention or for directions, in order to inform the Court of what it was in respect whereof damages were being claimed by the Plaintiff, and to ascertain the attitude of the Defendants to the bases of, and the manner of calculation of, such damages, or, as a matter of prudence, to ascertain whether a single day would be adequate for the hearing of such an inquiry as to damages.

13 In the event, the inquiry before me occupied seven hearing days during the months of March, April and July 2002, no accurate estimation either before or during that period ever having been presented to the Court (or, apparently, even considered) by the legal representatives of the Plaintiff. When the matter came before me on 25 March 2002 Mr S. Jacobs of Counsel appeared for the Plaintiff; Robert Samuel Robertson, First Defendant, and Noaleen Anne Dennis, Second Defendant, each appeared in person.

14 It soon became abundantly apparent to me, firstly, that the hearing could not possibly conclude within one day. Secondly, that, unless an order were to be made referring the assessment of damages to a Master, I had no jurisdiction in the matter. Thirdly, that in performing the assessment, I required assistance, in a formal sense, to ascertain the bases upon which (and the cause or causes of action in respect of which) damages were being claimed.

15 In consequence, at the conclusion of the first day of the hearing, Monday, 25 March 2002, I made the following directions:

(1). I direct that the Plaintiff on or before Wednesday, 3 April 2002 serve upon each Defendant a draft minute of order in respect to the relief sought by the Plaintiff consequent upon the judgment delivered by Acting Justice Brownie on 20 August 2002.

(2). I direct that the Plaintiff on or before Friday, 12 April 2002 approach Acting Justice Brownie (or, if he not be available, the Duty Judge in the Equity Division), with a view to obtaining the relief set forth in the foregoing draft minute of order.

(3). I direct that the Plaintiff, forthwith upon obtaining the relief referred to in the preceding paragraph hereon, take all necessary action to cause the appropriate order to be entered.

(4). I adjourn the further hearing to Wednesday, 17 April 2002, reserving the entire day.

16 Consequent upon the foregoing directions, an order reflecting the reasons for judgment of Acting Justice Brownie was made by His Honour on 16 April 2002 and was entered on the same date. That order included, as order (1) thereof,

Judgment be entered forthwith for the plaintiff against the first and second defendant [ sic ] for damages to be assessed.

17 It is implicit in that order that the Plaintiff has elected to seek damages, rather than an account of profits, although the order does not specify in respect of what breaches or causes of action the Plaintiff is entitled to damages or upon which the Court should now proceed to such an assessment.

18 Further, although the order does not expressly refer the assessment of such damages to a Master, it is implicit in the terms of the order that that function will be performed by the Court, and traditionally the function of assessment of damages is performed by a Master in the Equity Division. (See R.W. Bentham and J.M. Bennett, “The Development of the Office of Master in Equity in New South Wales” (1961) 3 Syd LR 504; see, also, the note as to the Jurisdiction and Duties of the Master in Equity furnished to the Editors of The Practice in Equity (published in 1902) by Mr H.F. Barton, the then Master in Equity; and, see, further, and in particular, the Equity Act, 1899, section 66, where it was prescribed that the Master should carry out such inquiries as had previously been customary and, in other respects, investigate matters which the Judges decided to place before him.)

19 No party objected to my proceeding to a continuation of the hearing of the assessment of damages. For an abundance of caution, it may here be observed that the order made by Justice McClellan on 1 March 2002, by which he stood over the assessment of damages before myself on 25 March 2002 could appropriately be treated as being a matter (“where referred to a Master by an order of a Judge”) of the nature described in paragraph 4(b) of Part 3 of Schedule D to the Supreme Court Rules. If, however, there remains any doubt as to my power to conduct the inquiry as to damages, then that doubt should be removed by an express reference by Acting Justice Brownie before he directs entry of judgment for the Plaintiff in the amount which as a result of my inquiry I have assessed as damages.

20 It will be observed that my directions of 25 March 2002 included an adjournment of the further hearing to 17 April 2002, and that the entire day was reserved for that hearing. The reservation of only one further day for the continuation of the hearing was based upon the estimation given to me on 25 March 2002 by Counsel for the Plaintiff. That estimation was totally and completely inaccurate. After that first day the hearing of the assessment of damages continued, as I have already observed, not for one additional day, but for six additional days.

21 I have already recorded that each of the Defendants appeared in person, without legal representation. Because of the totally inaccurate estimates which throughout the hearing were constantly presented by the legal representatives of the Plaintiff, the hearing proceeded in a number of segments (being 25 March, 17 April, 1-3 July, 25-26 July). The First Defendant appeared throughout the hearing. However, the Second Defendant appeared only on the first and second days of the hearing. When the hearing resumed on 1 July she was not in attendance, and the First Defendant informed the Court that the Second Defendant was ill and would not be able to attend. No evidence in that regard was placed before the Court. That information was repeated by the First Defendant on 2 July, when he also informed the Court that he had been in contact with the Second Defendant on the previous day. The remainder of the hearing after 17 April proceeded in the absence of the Second Defendant.

22 I have already recorded that Acting Justice Brownie concluded his reasons for judgment by saying that he was satisfied that the Plaintiff had “made out its case in respect of every cause of action pleaded, as against both defendants”.

23 At an earlier stage in his judgment (paragraph 4), His Honour described the nature of the claims by the Plaintiff against the two Defendants as follows,

The primary thrust of the plaintiff’s claim against the first defendant is that he, using a false name, established a business in direct competition with the business sold, and that he solicited custom from the existing customers of the business; and against the second defendant, Ms Dennis, the plaintiff asserts that she effectively assisted the first defendant in doing this, including later establishing in her own name a business called Digital Franking, with which the first defendant was associated, and through which business there was established competition with the business sold, and the custom of the existing customers of the business sold was solicited. The claims against the two defendants were made on a number of different legal bases, but the case throws up questions of fact rather than of law.

24 His Honour’s reasons do not expressly delimit the nature of the damages to which His Honour considered the Plaintiff to be entitled, and thus the parameters within which I should proceed in an inquiry as to the assessment of such damages, and no assistance in that regard can be derived from the form of the order which eventually – at my insistence – was entered at the instance of the Plaintiff. Nevertheless, it appears to me implicit from the foregoing passage from His Honour’s reasons that I should proceed to inquire as to the damages suffered by the Plaintiff in consequence of the First Defendant establishing a business in direct competition with the business sold and soliciting custom from the existing customers of the business sold, and in consequence of the Second Defendant effectively assisting the First Defendant in so doing.

25 During the course of the hearing Counsel for the Plaintiff presented written submissions dated 13 May 2002 and subsequently written submissions “on the issue of damages” dated 24 July 2002. Those submissions were amplified by a document headed “Annexure “A” to the Submissions”, which descried itself as “setting out principles relevant to loss and damage”. Subsequently there was presented a further document, entitled “Heads and Quantum of Damage”, dated 26 July 2002, and containing, “in amplification of paragraph 43 of the Plaintiff’s submissions”, further material. Those documents will be retained in the Court file (although most of the material in the submissions of 13 May 2002 is totally irrelevant to the inquiry as to damages, since it relates to Mareva injunctions made against the Defendants).

26 The First Defendant also presented written submissions, dated 25 July 2002, which also will be retained in the Court file.

27 At paragraph 43 of the foregoing submissions of the Plaintiff dated 24 July 2002 the Plaintiff claims damages under the following heads:

(i) Loss of profit for the period of the restraint;

(ii) Loss of profit to remove the unfair “springboard” for the period after the restraint and up to the time the Plaintiff was forced to sell its business;

(iii) Damages for wasted management time;

(iv) Damages for inability to hedge against currency fluctuations;

(v) Damages for inability to expand business operations;

(vi) A component for aggravated and exemplary damages.

28 It should here be recorded that at the conclusion of the hearing before me it was stated by Counsel for the Plaintiff on 26 July 2002, and was noted, that the Plaintiff no longer claims aggravated and exemplary damages against the First Defendant, but only against the Second Defendant.

29 The significant evidence relied upon by the Plaintiff in the assessment of damages, and, in particular, in respect to the first head of damages claimed, being loss of profit suffered by the Plaintiff, was the opinion evidence from Graham Ian Hurwitz. Mr Hurwitz was a chartered accountant, who was not the accountant of the Plaintiff, and who gave expert evidence as to the asserted loss of profits of the Plaintiff. I accept the qualifications of Mr Hurwitz as an expert who is entitled to give opinion evidence in the area of his professional expertise.

30 I also accept the methodology adopted by Mr Hurwitz and the calculations performed by him. I did not regard his evidence as being affected or qualified as a result of the cross-examination conducted by the First Defendant.

31 It was the conclusion of Mr Hurwitz that in consequence of the conduct of the Defendants the Plaintiff has suffered loss of profits in an amount of $704,435.

32 The factual bases upon which the opinion evidence of Mr Hurwitz was grounded were contained in the evidence of Peter Michael Mallach and Ben Adler, the two principals of the Plaintiff company, and in the accounts and financial records of the Plaintiff, as well as in certain financial records of Pitney Mailing Services and Digital Franking. Although Mr Mallach at times was discursive in his responses to questions asked of him (and I appreciate that the manner of the cross-examination conducted by the First Defendant made responses by the witness somewhat difficult), I regarded both Mr Mallach and Mr Adler as truthful and reliable witnesses.

33 Much of the cross-examination by the First Defendant of Mr Hurwitz, Mr Mallach and Mr Adler was directed to establishing that the sales (and, in consequence, the profits) of the business were greater after the acquisition of the business by the Plaintiff. That fact, if established, does not mean that the Plaintiff is not entitled to damages. (In this regard I respectfully agree with the statement from the passage of the judgment of Acting Justice Brownie which I have already quoted, that the repeated statement of the First Defendant that the Plaintiff’s gross turnover exceeded expectations does not prove that the Plaintiff suffered no net loss.) The Plaintiff asserts that, by reason of the conduct of the Defendants, the profits of the Plaintiff were less than they would otherwise have been.

34 Much of the balance of the cross-examination of Mr Mallach and Mr Adler by the First Defendant and much of the First Defendant’s own evidence consisted of canvassing matters which were already the subject of findings by Acting Justice Brownie adverse to the First Defendant (or to both Defendants). A similar observation could also be made concerning various parts of the cross-examination of the First Defendant by Counsel for the Plaintiff.

35 In the course of his judgment Acting Justice Brownie said (paragraph 58) that he “did not find either of the Defendants to be a witness of credit”. Only the First Defendant gave oral evidence before me (the Second Defendant, as I have already recorded, was not present at the hearing after 17 April 2002). Despite the response made by the First Defendant under cross-examination on 3 July 2002 that he “would not have told Justice Brownie a material untruth”, I am, with respect, in total agreement with His Honour’s view of the First Defendant. I regarded him as a witness of no credit whatever. He was deliberately evasive. He frequently resorted to statements that he could not recall facts and events. At times his answers under cross-examination were manifestly deceitful. Little of his evidence was relevant to the question of damages asserted to have been suffered by the Plaintiff.

36 Where the evidence of witnesses for the Plaintiff is in conflict with that of the First Defendant I accept the former and reject the evidence of the First Defendant.

37 I am satisfied that the Plaintiff has established, essentially upon the evidence of Mr Hurwitz, an entitlement to damages for loss of profits in the amount of $704, 435.

38 The Plaintiff next claims a component for loss of profit “to remove the unfair “springboard” for the period after the restraint and up to the time the Plaintiff was forced to sell its business”. (I would in passing observe that the description of the time up to which such loss of profit is claimed is both emotive and inaccurate.)

39 The development of the concept of “headstart” or “springboard” relief was outlined by the Court of Appeal of New South Wales (consisting of Moffitt P, Hope and Samuels JJA) in United States Surgical Corporation v Hospital Products International Pty Limited [1983] 2 NSWLR 157 at 229-233 (it being noted that that decision of the Court of Appeal was reversed by the High Court of Australia, sub nomine, Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41). The concept has more recently been considered by the Court of Appeal of New South Wales in Industrial Rollformers v Ingersoll-Rand(Australia) Limited [2001] NSWCA 111 (unreported, 24 April 2001), where Giles JA (with whom Priestley and Meagher JJA agreed) said (at paragraph 182),

Protection against a headstart or springboard advantage is a recognised ground for a restraint. In Terrapin Ltd v Builders’ Supply Co. (Hayes) Ltd (1967) RPC 375, a confidential information case, it was said (at 391-392) -
“As I understand it, the essence of this branch of the law, whatever the origin of it may be, is that a person who has obtained information in confidence is not allowed to use it as a springboard for activities detrimental to the person who made the confidential communication, and springboard it remains even when all the features have been published or can be ascertained by actual inspection by any member of the public…
It is, in my view, inherent in the principle upon which Saltman Engineering Co. Ltd v Campbell Engineering Co. (1948) 65 RPC 203 rests that the possessor of such information must be placed under a special disability in the field of competition in order to ensure that he does not get an unfair start;…”
Many headstart or springboard cases are considered in United States Surgical Corporation v Hospital Products International Pty Ltd [1983] 2 NSWLR 157 at 228-233. It was there accepted that, if the person misusing confidential information gained from the headstart, injunctive relief or damages would be moulded or assessed accordingly, although it was considered that in that case the gain was not a headstart. More recent cases recognising a headstart or springboard advantage are Wright v Gasweld Pty Limited (1991) 22 NSWLR 317 at 338 and Stokely-Van Kamp Inc v New Generation Beverages Pty Ltd (1998) 44 NSWLR 607 at 615.

40 The concept of the unfair “springboard” of “headstart” is appropriately applied to profits which actually or potentially have been made by the wrongdoer (especially in consequence of misuse of confidential information). Where, as here, the Court is performing the exercise of assessing damages actually sustained by the party aggrieved, it is not appropriate to include in those damages an amount of profits which the wrongdoer has actually earned or might potentially have earned. The concept of the unfair “springboard” or “headstart” is appropriate in respect to those profits of a defendant wrongdoer. But here the Plaintiff has expressly disclaimed relief by way of an account of profits (where this concept of the unfair “springboard” could properly be taken into consideration).

41 In approaching the claim of the Plaintiff for a separate head of damages based upon the “springboard” or “headstart” concept, it is appropriate to exercise the caution recognised by the Court of Appeal of New South Wales in United States Surgical Corporation v Hospital Products International Pty Ltd, at 233, where the Court, after reviewing authorities relevant to the concept and its development, said

This review shows that the headstart approach to damages or other relief is not based on some artificial or arbitrary doctrine, to be applied regardless of the facts of the case. It is a principle applied in conformity with the more general principle that a person misusing confidential information must answer for his default according to his gain. A headstart may often be the gain in these cases. If it is the gain, damages will be assessed accordingly and any such relief, such as injunction, will be moulded. If it is not the gain, the method of assessing damages or the appropriateness of some other remedy has to be considered in the light of what that gain is.

42 In the factual circumstances of the instant case, as found by Acting Justice Brownie, the loss to the Plaintiff was the result of the filching by the First Defendant (aided by the Second Defendant) of customers of the Plaintiff, in contravention of the restraint provisions of the deed of sale. That loss is the subject of the damages component of loss of profits calculated by Mr Hurwitz. The conduct of the First Defendant does not in my conclusion fall within the ambit of the “headstart” or “springboard” concept, since the income of the First Defendant from filching those clients of the Plaintiff cannot be regarded as a legitimate gain to the Defendants.

43 In any event, the evidence of Mr Hurwitz delimits the profits lost or foregone by the Plaintiff in consequence of the conduct of the Defendants. Even if relevant to a claim for damages, the inclusion of a separate head of damages for the unfair “headstart” or “springboard” would in the instant case overlap and duplicate the damages calculated by Mr Hurwitz. Accordingly, I am not persuaded that the Plaintiff has established that such a separate head of damages should be included in the damages which it is entitled to recover from the Defendants.

44 The next head of damages claimed by the Plaintiff is in respect to wasted management time. In appropriate circumstances the law recognises an entitlement to such a component of damages. (See Tate & Lyle Food and Distribution Limited v Greater London Council [1982] 1 WLR 149. From that decision there was an appeal to the English Court of Appeal [1982] 1 WLR 971. The Defendants did not appeal on the question of damages and, accordingly, the Court of Appeal did not refer to damages in its decision. Subsequently, there was a further appeal, to the House of Lords [1983] 2 AC 511. The principal speech, being that of Lord Templeman (with whom Lord Keith of Kinkel, Lord Roskill and Lord Bridge of Harwich agreed) did not advert to this head of damages when, at 542, he dealt briefly with the measure of damages to which the appellant was entitled. The measure of damages was not adverted to by Lord Diplock, who delivered a dissenting speech.)

45 In the instant case, however, most of the evidence relied upon by the Plaintiff to support such a component in the damages claimed was evidence relating to the preparation of the present litigation. The time devoted by Mr Mallach and Mr Adler to, for example, conferences with their barrister at weekends, and the preparation of affidavits, and the poring over documentary material should appropriately be reflected in the calculation of the indemnity costs an order for which which has already been made in favour of the Plaintiff in the substantive proceedings. I am not satisfied that the evidence before me establishes an entitlement in the Plaintiff to a separate head of damages in this regard.

46 The next component of damages claimed by the Plaintiff is “for inability to hedge against currency fluctuations”. The evidence in this regard is contained in paragraph 111 (vi) of Mr Mallach’s affidavit sworn 6 July 2000. In that subparagraph the deponent refers to the fact that machines and many lines of consumables are imported and have to be paid for in American and Swiss currency, and that the Australian dollar has dropped in comparison to the American dollar. The deponent makes the general (and otherwise unsupported) statement “I estimate that the Plaintiff could have saved in the region of $5,000 - $10,000 over time had it had the resources to hedge (after the costs of hedging)”.

47 I am not satisfied that the Plaintiff has, firstly, established an inability to hedge against currency fluctuations, or, even if (contrary to the conclusion which I have just expressed) it has established such an inability, that it is entitled to damages in that regard arising out of the conduct of the Defendants. Such matters as fluctuations in currency must be treated as being beyond the control of the Defendants. Further, I consider that, in any event, the alleged damage is too remote. Moreover, currency fluctuations, in circumstances where materials are imported for use in a business, are an ordinary commercial risk. For any loss resulting therefrom I do not consider that the Defendants should be held liable.

48 The claim for inability to expand business operations is in my view totally misconceived. The Plaintiff relied in this regard upon the evidence of Mr Mallach in his affidavit of 6 June 2000, paragraph 111(a), that, if the Plaintiff had made additional profits in the order of $580,000 over the period of two years from the date of the purchase of the business and had not incurred legal costs for the present proceedings, then “it would have had further funds available for expansion”. I am not persuaded from the evidence that the Plaintiff in fact intended or desired to effect expansion in its business. There was no evidence of the nature of such expansion or of the manner in which it might have been carried out. Neither was there any evidence, even if it did have such an intention or desire, that the Plaintiff was precluded from doing so by the lack of available funds. Neither was there any evidence as to the amount of such funds which it would have needed for such a purpose. The evidence on this topic was imprecise and vague in the extreme. I am not satisfied that the evidence supports such an inability.

49 In any event, even if (contrary to the conclusion which I have just expressed), the Plaintiff were to establish an inability to expand its business operations, there is no evidence that that inability resulted solely (or substantially) from the conduct of the Defendants. It must be appreciated that, even despite the conduct of the Defendants, the turnover of the business sold to the Plaintiff by the First Defendant, and, in consequence, the profits generated by the business were greater after the business had been acquired by the Plaintiff (and despite the conduct of the Defendants) than they had been whilst the business was in the ownership of the First Defendant.

50 The final head of damages is for a component reflecting aggravated and exemplary damages. It has already been recorded that the Plaintiff stated, and had it noted, that this component was claimed only against the Second Defendant, as she is the only Defendant against whom a cause of action in tort is pleaded. The Plaintiff now no longer submits that exemplary damages are appropriate or available for breach of contract (upon which the claim against the First Defendant is based).

51 In his reasons for judgment Acting Justice Brownie, as I have already recorded, was satisfied that the Plaintiff had made out its case, in respect of every cause of action pleaded, as against both Defendants. Nevertheless, it is apparent from those reasons for judgment that the primary wrongdoer was the First Defendant, and that the cause of action asserted against the Second Defendant was that she effectively assisted the First Defendant in his breach of the restraint and his solicitation of existing customers of the business. I am not persuaded that the evidence establishes an entitlement in the circumstances of this case to a component for either aggravated damages or exemplary damages against the Second Defendant.

52 The consequence of my foregoing conclusions and findings is that upon inquiry I assess the damages suffered by the Plaintiff as a result of the conduct of the Defendants in the sum of $704,435.

53 The costs of the inquiry are not the subject of any reference to me. Accordingly, those costs must be dealt with by Acing Justice Brownie. For the assistance of His Honour, however, I would observe that the Plaintiff has been totally successful in respect to its claim for damages under the first head, being loss of profits. The Plaintiff has been totally unsuccessful in respect to its claim for damages under the remaining five heads. Nevertheless, most of the evidence and most of the hearing time were devoted to the Plaintiff’s claim for damages in respect to loss of profits. There was little evidence which related only to one or more of the remaining five heads of damages. Similarly, by far the greater part of the oral submissions addressed the claim for loss of profits, and only a relatively small part of the oral submissions addressed the other heads of damages claimed.

54 Were I required to do so, I would make an order for costs in favour of the Plaintiff against both Defendants, such costs to be on the party and party basis.

55 I make the following orders:

(1). Upon inquiry, I assess the damages in favour of the Plaintiff against the First Defendant and the Second Defendant in the sum of $704,435.

(2). I reserve to the parties liberty to apply to Acting Justice Brownie (or, if he not be available, the Duty Judge in the Equity Division) in respect to the costs of the inquiry as to damages.

(3). I reserve to the parties liberty to apply generally to Acting Justice Brownie (or, if he not be available, the Duty Judge in the Equity Division).

**********

Last Modified: 12/17/2002